ESAF Bank profit jumps to 160 crore rupees, a quarterly record
Key Facts
ESAF Small Finance Bank said on October 29 that its net profit reached 160 crore rupees in the second quarter of financial year 2027, its highest quarterly profit on record and more than double its first-quarter profit. The result marked a year-on-year turnaround from a net loss of 116 crore rupees in the second quarter of financial year 2026 to profit in the current period. In its results statement, the bank said quarterly profit "doubled compared with the previous quarter," putting net profit at 160 crore rupees. The turnaround puts asset quality and business growth at the forefront of the bank's results, alongside a return to profitability after a loss in the year-earlier period. The bank's data also showed improved interest income and margins in the quarter ended September.
Net interest income, the difference between a bank's income from lending and its funding costs, rose to 643.25 crore rupees in the second quarter of financial year 2027, up 73.0% from 371.79 crore in the year-earlier period. On a quarterly basis, income increased 10.1% from 584.08 crore rupees in the first quarter. Net interest margin widened to 8.2%, from 5.9% in the second quarter of financial year 2026. The expansion accompanied growth in deposits and advances, alongside a year-on-year decline in the cost of deposits. The bank said in its investor presentation that the cost of deposits was 7.0%, compared with 7.3% in the year-earlier quarter.
Deposits stood at 28,466 crore rupees in the second quarter, up 24% year on year and 6% quarter on quarter. Current and savings account deposits reached 6,645 crore rupees, growing 10% year on year and 6% quarter on quarter, the bank said. On the asset side, gross advances rose 25% year on year and 3% quarter on quarter to 23,934 crore rupees. Secured advances increased 32% year on year to 15,377 crore rupees, equivalent to 64% of the portfolio. The loan mix shows secured lending now accounts for a substantial share of the bank's business, with total advances growing alongside deposits.
The bank reported that its gross non-performing asset ratio fell to 2.8% on September 30, 2026, from 8.5% on the same date a year earlier. The net non-performing asset ratio also declined to 0.3% from 3.8%, according to the official disclosure. Provision coverage stood at 94.0% at the end of September, compared with 74.4% a year earlier. The bank said fresh slippages during the quarter were 75% lower than in the second quarter of financial year 2026. These indicators provide a year-on-year comparison of asset quality, showing lower non-performing asset ratios alongside higher provision coverage and reduced fresh slippages.
On operating performance, pre-provision operating profit rose to 362 crore rupees, up 289% year on year. The cost-to-income ratio improved to 57.7% in the second quarter of financial year 2027, from 82.0% in the year-earlier period. Meanwhile, capital adequacy rose to 24.1% from 22.4% year on year, according to the bank's investor presentation. Together with growth in net interest income, these figures reflect an improvement in operating and funding indicators compared with the previous year. The disclosure provided no specific date for a subsequent event or forward guidance on earnings.
In details of the portfolio mix, the gold loan portfolio exceeded 10,000 crore rupees, reaching 10,456 crore in the second quarter, up 39% year on year. Secured advances stood at 15,377 crore rupees, up 32% year on year and 6% quarter on quarter, and accounted for 64% of the total portfolio. The bank included these figures in its results for the quarter ended September 30, 2026. Growth in the gold loan portfolio strengthens the presence of secured lending in the loan mix, while its increased share is consistent with the reported shift in portfolio composition. The results were released on October 29, with the materials provided making no announcement of a specific upcoming date.